SRAVAN KUMAR KESHA,HYDERABAD vs. ITO, WARD-12(6), HYDERABAD

During the course of assessment proceedings, the AO called upon the assessee to furnish certain details. However, as the assessee failed to furnish the requisite details called for by the AO, the assessment was completed under Section 143(3) of the Act vide order dated 30.03.2013, wherein, inter alia, certain additions/disallowances were made, viz. (i) addition towards unexplained cash deposits in the assessee’s savings bank account maintained with ICICI Bank, Hyderabad Branch, bearing A/c No. 00401532392: Rs. 16,74,000/--; (ii) disallowance of the assessee’s claim for exemption towards HRA under Section 10 of the Act: Rs. 74,467/-; and (iii) disallowance of deduction claimed under Section 80C of the Act: Rs. 20,123/-.

Aggrieved, the assessee carried the matter in appeal before the CIT(A). However, the CIT(A), vide order dated 19.07.2016, dismissed the appeal on account of delay of 99 days involved in filing the appeal.

The assessee thereafter carried the matter before the Tribunal in ITA No. 1632/Hyd/2016. The Tribunal, vide its order dated 13.12.2019, condoned the delay of 99 days and restored the matter to the file of the CIT(A) with a direction to adjudicate the appeal on merits and in accordance with law, after affording reasonable opportunity of being heard to the assessee. Accordingly, the assessee's appeal was allowed for statistical purposes.

Accordingly, pursuant to the aforesaid order of the Tribunal, the matter was restored to the file of the first appellate authority. However, the Addl./JCIT(A)-2, Ahmedabad, vide his order dated 16.08.2024 passed under Section 250 r.w. Section 254 of the Act, proceeded on the basis that the appeal filed by the assessee before the Tribunal in ITA No. 1632/Hyd/2016 had already been allowed by the Tribunal vide order dated 13.12.2019. Accordingly, the Addl./JCIT(A), holding that the appeal pending before him had become infructuous, dismissed the same.

Aggrieved by the aforesaid order, the assessee has preferred the present appeal before us.

At the threshold of hearing of the appeal, Smt. S. Sandhya, Advocate, Ld. Authorized Representative for the assessee, submitted that the present appeal involved a delay of 442 days. Elaborating upon the reasons for the delay, the Ld. AR submitted that the same had crept on account of a bona fide misunderstanding of the order passed by the Addl./JCIT(A).

The Ld. AR submitted that the Tribunal, vide its earlier order passed in ITA No. 1632/Hyd/2016, dated 13.12.2019, had merely restored the matter to the file of the CIT(A) with a direction to adjudicate the appeal on merits, after affording reasonable opportunity of being heard to the assessee. However, the Addl./JCIT(A)-2, Ahmedabad, while giving effect to the aforesaid order, misconstrued it and observed that the appeal filed by the assessee before the Tribunal had already been allowed vide order dated 13.12.2019, and thus, the appeal pending before him was dismissed as infructuous.

The Ld. AR submitted that the assessee is a salaried employee and is not well versed with the intricacies of taxation laws. It was submitted that at the relevant time, the assessee was residing in the United Kingdom and was not personally conversant with the proceedings before the income-tax authorities in India. The assessee, therefore, remained under a bona fide belief that the matter had been concluded in his favor and that nothing further was required to be done on his part. It was submitted that the misconception of the assessee was dispelled only upon receipt of the demand notice issued by the AO dated 09.12.2025, whereby the assessee was called upon to deposit the outstanding demand of approximately Rs. 6.29 lakh. The Ld. AR submitted that immediately thereafter, the assessee consulted his counsel and took the necessary steps to file the present appeal.

The Ld. AR submitted that by the time the present appeal was filed, a delay of 442 days had occurred. It was, however, submitted that the delay was neither deliberate nor attributable to any lackadaisical approach on the part of the assessee. Rather, the delay had its genesis in a bona fide misunderstanding arising from the manner in which the Addl/JCIT (Appeals)-2, Ahmedabad, construed the Tribunal's order dated 13.12.2019.

The Ld. AR submitted that the Tribunal, in its earlier order dated 13.12.2019, had not adjudicated the appeal on merits but had restored the matter to the file of the CIT(A) for adjudication on merits. However, the Addl./JCIT(A)-2, Ahmedabad, had wrongly proceeded on the basis that the appeal before the Tribunal had already been allowed and that nothing further survived before him.

The Ld. AR, accordingly, submitted that the delay deserved to be condoned in the interest of substantial justice. In support of her contention, reliance was placed upon the judgment of the Hon’ble Supreme Court in the case of Vidya Shankar Jaiswal v. ITO, Ward-2, Ambikapur, SLP (Civil) Nos. 26310-26311/2024, dated 31.01.2025, reported in [2025] 174 taxmann.com 21 (SC). The Ld. AR also placed on record the petition filed by the assessee seeking condonation of delay along with the supporting affidavit.

Per contra, the Ld. Senior Departmental Representative (for short, ‘Ld. Sr. DR’) opposed the application seeking condonation of delay. The Ld. Sr. DR submitted that the delay of 442 days was inordinate and that the reasons furnished by the assessee did not constitute sufficient cause for condonation of the delay. It was, accordingly, submitted that the delay ought not to be condoned.

We have heard the Ld. Authorized Representatives of both parties, perused the orders of the authorities below and the material available on record, as well as considered the judicial pronouncements pressed into service by them.

Admittedly, an appellant is expected to remain vigilant and pursue his statutory remedy within the period prescribed under law. However, it is equally well settled that where the delay in filing an appeal has occasioned on account of bona fide circumstances, which cannot be attributed to deliberate inaction or a lackadaisical approach on the part of the appellant, the same, in the interest of substantial justice, merits consideration for condonation. Our aforesaid view is supported by the judgment of the Hon’ble Supreme Court in Vidya Shankar Jaiswal v. ITO, Ward-2, Ambikapur, SLP (Civil) Nos. 26310-26311/2024, dated 31.01.2025, reported in [2025] 174 taxmann.com 21 (SC), which, while considering a delay of 166 days in filing an appeal before the Tribunal, emphasized that a justice-oriented and liberal approach ought to be adopted while considering an application for condonation of delay. The Hon’ble Apex Court, accordingly, condoned the delay and directed the Tribunal to adjudicate the appeal on merits.

Coming to the facts of the present case, we find substantial force in the contention of the Ld. AR that the genesis of the delay involved in filing the present appeal lies in the manner in which the earlier order of the Tribunal in ITA No. 1632/Hyd/2016, dated 13.12.2019, came to be construed. On perusal of the aforesaid order of the Tribunal dated 13.12.2019, we find that the Tribunal had not allowed the appeal of the assessee on merits. Rather, the Tribunal had condoned the delay of 99 days and restored the matter to the file of the CIT(A) with a specific direction to adjudicate the appeal on merits and in accordance with law, after affording reasonable opportunity of being heard to the assessee. However, the Addl./JCIT(A)-2, Ahmedabad, while disposing of the appeal pursuant to the aforesaid order of the Tribunal, vide his order dated 16.08.2024, proceeded on the premise that the appeal filed by the assessee before the Tribunal had already been allowed by the Tribunal vide order dated 13.12.2019 and, consequently, held that the appeal pending before him had become infructuous.

On perusal of the impugned order, we find substance in the contention of the Ld. AR that the aforesaid observation of the Addl./JCIT(A)-2, Ahmedabad, proceeded from an incorrect appreciation of the order passed by the Tribunal. Once the Tribunal had restored the matter to the file of the CIT(A) with a specific direction to adjudicate the appeal on the merits, the appeal could not have been treated as infructuous on the premise that the Tribunal had already allowed it on the merits.

We are conscious of the fact that the assessee ought to have remained vigilant and, upon receipt of the order dated 16.08.2024, ought to have examined the same and taken appropriate legal recourse within the prescribed period. However, the explanation furnished by the assessee cannot be considered in isolation. As observed by us hereinabove, the assessee was residing in the United Kingdom at the relevant point of time and, being a salaried employee and not conversant with the intricacies of income- tax proceedings, remained under a bona fide belief that the matter had been concluded in his favor. In the peculiar facts of the present case, the assessee’s failure to take further steps, arising from such bona fide belief, cannot be equated with deliberate negligence or a lackadaisical approach.

We further find that upon receipt of the demand notice dated 09.12.2025 raising a demand of approximately Rs. 6.29 lacs, the assessee approached his counsel and took steps for filing the present appeal. Thus, there is nothing on record to suggest that the assessee deliberately chose not to pursue the matter or that the delay was occasioned with a view to derive any undue advantage.

Considering the totality of the facts and circumstances of the case and keeping in view the judgment of the Hon’ble Supreme Court in Vidya Shankar Jaiswal Vs. ITO (supra), we are of the considered view that, though the delay of 442 days is substantial, the explanation furnished by the assessee constitutes a reasonable and bona fide cause.

Accordingly, in the interest of substantial justice, we condone the delay of 442 days in filing the present appeal and admit the appeal for adjudication on merits.

Coming to the merits of the present appeal, we find that the entire controversy arises from the erroneous understanding of the order passed by the Tribunal in ITA No. 1632/Hyd/2016, dated 13.12.2019. As noted hereinabove, the Tribunal, vide its order dated 13.12.2019, had restored the matter to the file of the CIT(A) with a direction to adjudicate the appeal on merits, after affording reasonable opportunity of being heard to the assessee. The Tribunal did not allow the assessee's appeal on the merits. The Addl./JCIT(A)-2, Ahmedabad, therefore, erred in observing that the appeal of the assessee had already been allowed by the Tribunal and, on that basis, in holding that the appeal pending before him had become infructuous. In our considered view, once the Tribunal had restored the matter to the file of the CIT(A) for adjudication on merits, the Addl./JCIT(A)-2, Ahmedabad, was required to comply with the specific directions contained in the order of the Tribunal and adjudicate the grounds raised by the assessee on merits. The impugned order, having been passed on an incorrect understanding of the earlier order of the Tribunal, cannot be sustained.

We, therefore, set aside the impugned order dated 16.08.2024 passed by the Additional/Joint Commissioner of Income Tax (Appeals)-2, Ahmedabad, and restore the matter to his file with a direction to adjudicate the appeal of the assessee on merits and in accordance with law, after affording reasonable opportunity of being heard to the assessee.

Needless to say, the assessee shall cooperate in the set aside proceedings and furnish such details and documents as may be called for by the Addl./JCIT(A). The Addl./JCIT(A) shall thereafter pass a speaking order in accordance with law.

In the result, the appeal filed by the assessee is allowed for statistical purposes.